CLOs

  • SFSF investments disclosed

    Sector developments and company hires

    SFSF investments disclosed
    The AOFM has disclosed the recent investments it has made under the Structured Finance Support Fund. In the primary market, the fund was the sole third-party investor in the A2 tranches of FirstMac 2020-1 (it also invested in the A1 through D tranches) and Liberty Series 2020-1 on 27 March and 8 May respectively. It has also .......

    Market Moves 12 May 2020

  • Known unknown

    Lack of data in MM CLOs leaves future open to interpretation

    US middle market CLOs currently appear to be in a better position than their broadly syndicated loan peers, with considerably fewer negative rating actions to date. However, while the sector undoubtedly benefits from some strengths, increasing transparency could yet reveal challenges.

    “Middle market CLOs have a mix of pros and cons, but we still need so much more .......

    News Analysis 7 May 2020

  • Ladder locks in financing

    Sector developments and company hires

    Ladder locks in financing
    Ladder Capital has entered into a strategic financing arrangement with Koch Real Estate Investments, under which Koch will provide the company with approximately US$206.4m in senior secured financing to fund transitional and land loans. As part of the strategic financing agreement, Koch has the right to make a US$32m equity investment in the Ladder at any time .......

    Market Moves 5 May 2020

  • WAM guidelines finalised

    Sector developments and company hires

    WAM guidelines finalised
    The EBA has published its final guidelines on the determination of the weighted average maturity (WAM) of the contractual payments due under the tranche of a securitisation transaction, as laid down in the CRR. These guidelines aim at ensuring that the methodology applicable for the determination of the WAM for regulatory purposes is sufficiently transparent and harmonised .......

    Market Moves 4 May 2020

  • MBS overvaluation case settled

    Sector developments and company hires

    Overvaluation case settled
    The US SEC has accepted an offer of settlement from Semper Capital Management in connection with administrative and cease-and-desist proceedings against it. On the basis of the offer, the Commission finds that from July 2013 through May 2014, Semper overvalued certain odd lot positions in securities held by the Semper MBS Total Return Fund (SEMMX), which caused .......

    Market Moves 1 May 2020

  • Targeted action

    Wholesale ratings downgrades questioned

    The raft of negative rating actions currently hitting the securitisation market is perceived to be driven by the stress created by coronavirus containment efforts. To the extent that some credit ratings were heading for a downgrade before the pandemic, this stress may simply be hastening rating actions. However, there are some who question whether wholesale downgrades are helpful in the .......

    News Analysis 1 May 2020

  • Manager scrutiny

    CLO manager performance on watch

    CLO manager scrutiny is growing just as market conditions make their job harder. Nevertheless, differentiation is set to accelerate as investors have to adapt the way they assess management performance.

    Jason Merrill, investment specialist at Penn Mutual Asset Management, says: “This pandemic is obviously very unusual and has thrown the market into a downturn. Winners will be those .......

    News Analysis 30 April 2020

  • Cautiousness prevails

    European CLO market update

    The European CLO market has had a solid run in to month-end this week, with the first post-Covid crash new deals and secondary activity deepening. However, cautiousness prevails.

    While the BWIC market remains patchy and the colour released from it even patchier, though the weaker names generally on offer hasn’t helped, overall secondary activity has been strong this .......

    News 30 April 2020

  • Unlocking capital

    Premod Thomas, ceo of Bayfront Infrastructure Management, answers SCI's questions

    Q: Bayfront Infrastructure Management is seeking to help address an infrastructure financing gap in the Asia-Pacific region (SCI 29 April). Can you explain what you mean by this?
    A: According to the Asian Development Bank, Asia will need approximately US$1.34trn annually in infrastructure financing between 2016 and 2020 to sustain economic growth. This represents approximately 6% of the region’s .......

    The Structured Credit Interview 30 April 2020

  • Prudential flexibility reiterated

    Sector developments and company hires

    Prudential flexibility reiterated
    The European Commission has adopted a package to help facilitate bank lending to households and businesses throughout the European Union that includes an Interpretative Communication on the EU's accounting and prudential frameworks, as well as targeted ‘quick fix’ amendments to the CRR, in order to maximise the ability of banks to lend and absorb losses related to .......

    Market Moves 29 April 2020

  • Growth phase

    Asian infrastructure loans eyed

    Singapore-based Clifford Capital has established a holding company structure under Clifford Capital Holdings (CCH) to drive its next phase of growth. The firm plans to expand into new business lines, including the securitisation of infrastructure loans through Bayfront Infrastructure Management and the provision of private credit and mezzanine financing solutions through Keppel-Pierfront Private Credit Funds (SCI 1 April). 

    News 29 April 2020

  • European SME ABS struggling

    Sector developments and company hires

    European SME ABS struggling
    Coronavirus-driven disruption is creating financial difficulties for European SMEs that heavily rely on securitisations for funding. Consequently, the crisis and subsequent recession will challenge the asset quality of SME ABS, according to a new report from Moody’s.

    “There is a widespread lack of financial strength and fewer financing options among SMEs, relative to large corporate .......

    Market Moves 27 April 2020

  • De-risking deluge?

    US CLO managers' initial crash response assessed

    The current unprecedented trading conditions will only lead to ever-greater CLO manager differentiation. For now, a new report assesses how managers have initially responded to the market and economic volatility seen so far.

    JPMorgan CLO research analysts have analysed 173,420 US loan trades for the year-to-date. This adds to their ongoing study of now 2.39 million CLO manager .......

    News 27 April 2020

  • Inventory ABS prepped

    Sector developments and company hires

    Inventory ABS prepped
    Fintech platform Supply@ME Capital (SYME) has entered into an agreement with StormHarbour Securities for the issue, distribution and placing of a series of ABS that are guaranteed against inventories purchased directly by the platform's SPVs (SCI 15 April). Details of the securitisation programme are being finalised, but it is anticipated to cover - within 12 months .......

    Market Moves 24 April 2020

  • Grandfathering for Dutch CLO issuers

    Sector developments and company hires

    Grandfathering for Dutch CLO issuers
    The Dutch tax authorities have provided written confirmation to CLO issuers domiciled in the Netherlands that their recently revised position on the VAT exemption (SCI 10 March) will not apply with retroactive effect. Further, the VAT exemption will continue to apply to transactions for a grandfathering period until 1 January 2021. Issuers are continuing a .......

    Market Moves 23 April 2020

  • Structural review

    New shape of European CLOs examined

    CLO issuers are having to adapt to the current market environment and consequently new deals are moving away from traditional structures. A new report from S&P examines the major changes it is seeing in proposed European issuance.

    Understandably many deals being proposed are utilising lower leverage and greater protection. “To address the increased downside risks on corporate downgrades, .......

    News 22 April 2020

  • Rating reaction?

    Potential shift to non-investment grade drives selling

    The CLO BWIC calendar has been dominated by triple-B paper so far this week, as sellers look to off-load bonds ahead of potential downgrades into non-investment grade territory. The pattern could continue for some time, with rating-sensitive investors forced to sell, pushing spreads wider.

    After Moody’s became the latest rating agency to place large swathes of CLOs .......

    News 21 April 2020

  • Moody's puts CLOs under review

    Sector developments and company hires

    Moody’s puts CLOs under review
    Moody's has placed on review for downgrade its ratings on 859 tranches issued by 358 US BSL CLOs (plus another 25 linked US CLO combo notes, secured notes and repacks) and 117 tranches issued by 39 European BSL CLOs. The affected securities represent 19% of Moody's US-rated BSL CLOs and 14% of its European-rated CLOs.

    Market Moves 20 April 2020

  • CMBS secured, unsecured sub debt weighed

    Sector developments and company hires

    CMBS secured, unsecured sub debt weighed
    Senior US CMBS loans with unsecured subordinate debt (such as mezzanine or preferred equity) show significantly lower default rates than senior loans with secured subordinate debt (such as B-notes) at comparable leverage points, according to Fitch. The agency evaluated the performance of 1,001 senior CMBS conduit loans with subordinate debt in place, issued between 2003 .......

    Market Moves 16 April 2020

  • Second wave

    Widespread CLO rating downgrades add further uncertainty

    Extensive CLO downgrades are expected to follow the widespread pandemic-driven negative rating actions already seen on underlying loans. Any such second wave is likely to hamper the market’s tentative early stage recovery and increase uncertainty and concerns over the future.

    The second wave is inevitable, asserts one CLO trader. “You have to expect to see further downgrades of CLOs themselves, .......

    News Analysis 16 April 2020

  • Uncertain ratios

    OC senior test failures accelerate, but options remain for some CLO managers to cure breaches

    As the April reporting season gets underway in earnest, the number of US CLOs failing their OC tests is accelerating and breaches are now also moving up the capital stack. However, despite difficult market conditions, some managers still have some ability to cure breaches.

    “Some deals have already started reporting late March/early April reports and some deals are .......

    News Analysis 15 April 2020
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